REPUBLIC OF MALAWI ROADS AUTHORITY FIVE-YEAR STRATEGIC AND BUSINESS PLAN

Transcription

1 REPUBLIC OF MALAWI ROADS AUTHORITY FIVE-YEAR STRATEGIC AND BUSINESS PLAN December 2005

2 List of Abbreviations Table of Contents Page iii 1 Executive Summary 1.1 The Roads Authority iv 1.2 Current Approach to Road Infrastructure Development and Management iv 1.3 NRA Five-Year Business and Strategic Plan iv 1.4 Implementing Strategies vii 2 Introduction 2.1 Country Characteristics The Transport Sector The Roads Authority The Five-Year Plan 9 3 The Business and Strategic Plan 3.1 Overall Programme Specific Programmes 11 4 Financial Plan 4.1 General Road Fund Development Fund 17 5 Implementation Strategies 5.1 Use of Modified Performance-Based Term Contracts for Routine Maintenance Improved Quality Control Axle Load Control Raising of Adequate Funds Effective Monitoring and Evaluation Organisational Restructuring Enhanced Public Awareness Enhanced Strategic Alliances and Linkages Continuously Adapting to the Changing Business Environment Continued Staff Capacity Building Continued Environmental Management Road Safety Initiatives Preservation of Road Reserve 23 i

3 Annexes Annex A. The Public Road Network 24 Annex B. Overall Road Infrastructure Programmes - Funding and Associated Planned Physical Indicators 36 Annex C Overall Road Fund Programmes - Funding and Associated Planned Physical Indicators 46 Annex D Detailed Road Fun d Programmes - Funding and Associated Planned Physical Indicators 48 Annex E Overall Development Programmes - Funding and Associated Planned Physical Indicators 53 Annex F Detailed Development Programmes - Funding and Associated Planned Physical Indicators 54 ii

4 List of Abbreviations used in this Document and their Meanings AfDB ASANRA BADEA BT CRD EIRR EU GIS GoM HDM ISO JICA LIA LL LVSR MCA MK NRA OPEC RMI RoadSIP ROMARP RTD SATCC SMEC UDRD US$ WB African Development Bank Association of Southern National Roads Authorities Arabic Bank for Economic Development in Africa Blantyre Central Roads Division Economic Internal Rate of Return European Union Geographical Information System Government of Malawi Highway Development Management International Standards Organisation Japanese Internatonal Cooperation Agency Lilongwe International Airport Lilongwe Low Volume Sealed Roads Multi Criteria Analysis Malawi Kwacha National Roads Authority Oil and Petrolium Exporting Countries Road Maintenance Initiative Road Sector Investment Programme Road Maintenance and Rehabilitation Programme Road Traffic Department Southern Africa Transport and Communications Commision Snowy Mountains Engineering Consultants Urban and District Roads Division United States Dollar World Bank iii

5 1. Executive Summary 1.1 The Roads Authority The Roads Authority (NRA) was established in 1998 under an Act of Parliament (Act No. 13 of 1997) as an autonomous body under the Ministry of Works and Supplies (now Ministry of Transport and Public Works). Its mandate is to maintain and rehabilitate all designated public roads using dedicated revenue from the fuel levy and other road user charges. This was in response to and a direct result of Road Maintenance Initiative (RMI) Studies initiated and funded by the World Bank (WB) and European Union (EU). This study identified the need by Malawi Government to put in place mechanisms for sustainable road infrastructure development and maintenance, a trend that was prevailing in the sub-saharan region. 1.2 Current Approach to Road Infrastructure Development and Management Since its establishment, the NRA has been managing the road infrastructure through short-term plans (annual budgets). Under this practice, hybrid short-term contracts encompassing routine, periodic, rehabilitation and upgrading activities targeting specific road sections countrywide have been undertaken. This short-term planning has been creating a lot of pressure on NRA in that the general public has ended up bringing in their specific road infrastructure requirements. 1.3 NRA Five-Year Business and Strategic Plan It is against this background that the Roads Authority engaged a consultant (SweRoad) in 2002 to formulate the NRA Five-Year Business and Strategic Plan. This plan was to take into account forecasted Road Fund revenues in coming up with a five-year rolling road infrastructure programme. The Final Plan was ready by March However, the plan was not implemented as stakeholders and cooperating partners perceived it to be too ambitious in terms of forecasted revenues. The plan also lacked justification on the identification and prioritisation of programmes. Following the comments from various stakeholders and cooperating partners on the SweRoad NRA Five-Year Business and Strategic Plan, the NRA has reviewed the plan taking into consideration realistic projections of revenue from both the Road Fund budget and donor support and using available documentation (SMEC report which is deemed to be valid to-date in the absence of any other similar study) for economic justification and prioritisation of programmes. iv

6 This Five-Year Business and Strategic Plan outlines a five-year rolling road programme using revenue projections based on trends since the establishment of NRA. The plan also sets out implementation strategies that are going to be adopted. This Five-Year Business and Strategic Plan has been developed with the following as its main objectives: Ensure accessibility on all designated roads through newly introduced Routine Term Maintenance Contracts which will initially run for one year. Systematic rehabilitation of bitumen roads which have outlived their design life with the aim of reducing maintenance costs. Connecting all district centres with bitumen roads. Ensure timely implementation of periodic maintenance to prevent further deterioration of roads. Construct new roads based on Malawi Government priorities as approved by Economic Planning and Development (EP & D) with funding from Donors. Among other priority areas requiring such improved road infrastructure is tourism. Using the Low Volume Sealed Roads Concept, reduce unpaved road network by gradually upgrading some unpaved roads to bitumen standard. This will assist in reducing maintenance and vehicle operating costs. Gradual replacement of timber-deck bridges with concrete decks with the aim of reducing maintenance costs and environmental degradation. Improve on financial and operations management through effective Road Funds Collection System and Road Management Structures. The Plan intends to utilise US$ million comprising US$77.19 as Road Fund budget and US$ million as development budget over the planning period ( ). The budget is broken down as follows: US$9.71 million for planning and design activities US$34.99 million for annual routine maintenance on the entire designated road infrastructure (15,451km) US$77.39 million for periodic maintenance of paved roads (1,854km) US$93.09 million for rehabilitation of roads (536km) US$ million for upgrading of roads to paved standard (1,179km) US$11.60 million for upgrading of low-volume roads to paved standard (116km) US$7.03 million for upgrading of earth roads to gravel standard (185km) US$48.67 million for construction of concrete bridges decks (5,372m), the bigger portion being replacement of single lane timber-deck bridges with concrete decks It will be noted that the value of the proposed programmes under this plan is quite enormous when compared to the current local contractors capacity. It is anticipated that contractors capacity is to improve with time to the extent that it could handle most of the proposed programmes. This is likely to be achieved through enhanced strategic alliances with the construction industry v

7 and formulation of contract packages commensurate to available contractor capacity. Furthermore, NRA will continue considering regional and international contractors. International contractors are to be attracted into the country if signals for increased opportunities for civil works are manifested Road Fund Programme The operations component of the Road Fund budget has been estimated at US$77.19 million over the five-year planning period ( ). This budget includes planning activities (US$6.33 million) but less operating expenses. Under this budget, it has been projected that revenue will gradually increase from US$13.15 million in year one (2006/2007) to US$17.69 million in year five (2010/2011). This budget will be used to undertake routine maintenance activities on the entire designated road network at all times at a total estimated cost of US$34.99 million over the five-year period starting with an initial budget of US$7.55 million gradually reducing to a constant US$6.76 million per year by year three (2008/2009). It is anticipated that by this time the network condition will have reached a stable state. This is going to be achieved through the use of modified Performance-Based Term Maintenance Contracts. NRA is aware that under an ideal situation, high order road infrastructure activities such as periodic maintenance and rehabilitation of paved roads, upgrading of roads to paved standard and upgrading of timber deck bridges to concrete decks are supposed to be undertaken under development budget. It might however be appreciated that this budget cannot satisfy all the needs on the ground. Having made some saving under the Road Fund budget after meeting the routine maintenance needs on the ground, it is only proper to undertake such high order maintenance activities with the balance of funds. With this in mind and the backlog maintenance on the ground despite development budget being in place, NRA therefore intends to utilise the balances from the Road Fund budget for the periodic maintenance, rehabilitation and upgrading once the all time routine maintenance needs on the entire network have been satisfied. During this five-year planning period, NRA intends to use: US$5.48 million for periodic maintenance of paved roads (137km) US$10.42 million for rehabilitation of paved roads (124km) US$11.60 million for upgrading of roads to Low-Volume Paved Standard (116km) US$8.37 million for replacement of timber-deck bridges with concrete decks (2,961m) Roads that have been earmarked for these high order maintenance interventions were identified as economically viable through either Economic Internal Rate of Return (EIRR) or Multi-Criteria Analysis (MCA) under the SMEC Study. It is assumed that a re-run of the economic analysis on these roads would not change the order of priority. vi

8 1.3.2 Development Programme The development of road infrastructure in Malawi, especially major upgrading projects, has heavily relied on government appropriations and cooperating partners under development budget. The current and foreseeable revenue levels under the Road Fund could not take over this huge task. Development budget is therefore to continue complementing road infrastructure activities under this plan and this is in line with the NRA Act. This Plan has therefore put up a development budget estimated at US$ million over the five-year planning period ( ). Out of this budget: US$71.91 million is for periodic maintenance of paved and unpaved roads (1,718km) US$82.77 million is for rehabilitation of paved roads (429km) US$ million is for upgrading of roads to paved standard (1,095km) US$7.03 million is for upgrading of roads to gravel standard (185km) US$40.30 million is for construction of concrete bridges (2,410m), the major component being replacement of timber-deck bridges with concrete decks As is the case with roads planned for high order maintenance interventions under Road Fund budget, the development budget also has targeted those roads that were identified as economically viable through either EIRR or MCA under the SMEC Study. Other roads with secured funding have also been included in the plan although they might not have been indicated as roads requiring such interventions under the SMEC Study. Road infrastructure projects with secured funding have been programmed for the earlier years of the plan and those whose funding is yet to be identified in the later years of the plan. 1.4 Implementing Strategies In order to realise the plan, the NRA will put in place the following implementation strategies: Use of Modified Performance based term contracts for routine maintenance Improved quality control Improved overload control Raising of adequate funds Effective monitoring and evaluation Organisational restructuring (separation of functions between Road Fund management and operations) Enhanced public awareness Enhancing of strategic alliances and linkages with various stakeholders Continuously adapting to the changing business environment Continued staff capacity building Continued environmental management and other cross-cutting issues vii

9 Road safety initiatives Preservation of road reserve viii

10 2. Introduction 2.1 Country Characteristics Malawi is a landlocked country located in southern Africa and it shares its boundaries with Mozambique to the south, south-east and south-west, Tanzania to the north and north-east and Zambia to the west and north-west. The size of Malawi is 118,500 square kilometers of which one-fifth is water, the largest being Lake Malawi. The country is long and narrow extending over 850 kilometers from north to south with varying width the widest being 150 kilometers. Administratively, Malawi is divided into three regions, namely, north, centre and south and each region is further divided into districts. Currently there are 27 districts in Malawi, 6 in the Northern region, 9 in the Central region and 12 in the Southern region. Malawi has a centralized government structure but is undergoing a decentralisation process where some powers currently under central government will devolve to the district and local authorities. According to population census results, the latest being that of 1998, the population of Malawi is estimated at 9.9 million people, with 86 percent living in rural areas. The projected average growth rate of the population at that time was 1.9 percent per annum and about 40.8 percent of the population was illiterate, life expectancy was estimated at 37 years, infant mortality was estimated at 104 per 1000 live births and child mortality was estimated at 189 per 1000 live births. Malawi is one of the least developed countries in the world ranked 165 th out of 174 countries according to the 2004 UN human development index. About 65 percent of the population lives below the poverty line. Gross National Product per capita is estimated at US$190 per annum. Agriculture is the main economic activity in Malawi accounting for more than a third of Gross Domestic Product and more than three quarters of export earnings. Manufacturing is underdeveloped and accounts for only 13 percent of gross domestic product. Malawi imports most of its manufactured products and inputs for agricultural and industrial production. Due to the underdeveloped nature of the economy and the associated poverty, Malawi continues to rely heavily on donor funding for implementation of its development programmes and central government operations. The development budget is almost entirely funded by donors and part of the Road Fund expenditure is also covered by grants from donor governments. This scenario is likely to remain unchanged in the short to medium term. 1

11 2.2 The Transport Sector The transport system in Malawi currently comprises 15,451 kilometers of designated public road infrastructure network, 810 kilometers of railway track, 4 major lake harbours and 4 commercial airports. Being a land-locked country, road infrastructure transport mode is the most dominant mode of transport in relation to rail, lake and air due to its extensive coverage countrywide. (urban and rural areas). Currently, road infrastructure handles more than 70% of the internal freight traffic and 99% of passenger traffic. Current statistics suggest that Malawi vehicle fleet is well over 300,000 vehicles. Additionally, road transport handles more than 90% of the international freight and passenger traffic. The road infrastructure network is and will remain the only mode of transport providing vital links between urban centres, periurban centres and the remote areas of Malawi. It is therefore proper to conclude that road infrastructure network plays and will continue playing a very crucial role in the social-economic development of Malawi. It is against this background that the Government has placed emphasis, both in the transport sector policy and the Malawi Poverty Reduction Strategy, on the need for the country to have a designated public road infrastructure network that ensures provision of adequate, safe, reliable, efficient and economical transport services in order to meet the country s current and future road transport needs and in promoting pro-poor growth. The 15,451 kilometre designated road network comprises main, secondary, tertiary, district and urban roads as indicated in Table 2.1. Through an ongoing study to reclassify the road network there is an indication that the total road network including the undesignated roads is approximately 28,000 kilometers and this will affect the current designated network. The roads under this study will be incorporated into the designated road network once gazetted. Table 2.1: Designated Public Road Infrastructure Network Road Class Paved Unpaved Total Km % Km % Km % M ain 2, , Secon d ary , , T ertiary , , D istrict 8 0 3, , U rb an ,349 9 T otal 4, , , % The Roads Authority Prior to 1998, road maintenance and construction was largely under the Ministry of Works and Supplies (now Ministry of Transport and Public Works) with funding based on appropriations from the Ministry of Finance. However, allocation of 2

12 financial resources to the road sector did not match with the maintenance requirements on the ground due to poor state of the country s economy and competing demands from other sectors. As a result, service delivery on road infrastructure development and management deteriorated considerably, a situation that manifested in the poor state of the road infrastructure during the early 1990s. It therefore became apparent that road maintenance under the then Ministry of Works and Supplies, which was both a policy making institution and an executing agency, was unsustainable. This led to Road Sector Reforms, which were set in motion by RMI Studies in 1995 following government decision to effectively address road infrastructure development, management, and funding problems. The principle was to sustain the road network investment through a targeted approach to revenue generation from the road users and the establishment of an agency outside the public service to manage the road network and account for the resources against tangible achievements in road infrastructure development and management. In 1997 the Government went ahead to implement recommendations of the Road Maintenance Initiative (RMI) study that was co-financed by World Bank and European Union in 1996 by establishing the Roads Authority (NRA) in 1998 under an Act of Parliament (Act No. 13 of 1997) as an autonomous body under the current Ministry of Transport and Public Works to be its implementing agency Strategic Elements Vision: Mission: Objectives: By the year 2020 the Malawi public road network is developed and maintained up to a standard where all motorized and non-motorized traffic can reach every society of the country in adequate, safe, reliable, efficient, economic and environmentally friendly manner at all times of the year. To develop and maintain the public road network infrastructure investment in a cost effective manner with a view to providing an accessible, reliable, efficient, safe, sustainable and most economic transport system in Malawi. To ensure that public roads are maintained and rehabilitated at all times; To raise funds (through road user charges collection) for the maintenance and rehabilitation of public roads; and 3

13 To advise the Minister and, where appropriate, the Minister responsible for local government on the preparation and efficient and effective implementation of annual national roads programmes and the control and overloading of vehicles on public roads. The operations of NRA are based on the following core values: Mobilise adequate and sustainable financial resources for implementation of its programs; Be driven by the need to perform effectively, efficiently and economically in the construction and maintenance of roads in Malawi; Conduct its business in an open, transparent, accountable and competitive manner; Ensure optimum utilisation of local resources; Ensure compliance with environmental and road safety regulations; and Ensure that its managers are given mandate to manage and achieve specific goals and hold them totally accountable for their actions Organisational Structure NRA has a 12-member Board of Directors that draws membership from the following public, private sector and main road users in Malawi: One member nominated by and representing the Road Transport Operators Association; One member nominated by and representing the Bus and Taxi Operators Association; One member nominated and representing Tobacco Association of Malawi, the Tea Growers association of Malawi and the Sugar Manufacturing Industry; One member nominated by and representing the Chamber of Commerce and Industry; One member nominated by and representing local government authorities; One member nominated by and representing The National Road Safety Council; One member nominated by and representing the National Construction Industry Council; Three Members of the public representing the general interest of the public; The following ex-officio members: The Secretary for Local Government, or his designated representative; and The Secretary for Transport and Public Works or his designated representative. The Minister of Transport and Public Works appoints a Chairman among the non exofficio members. The Minister also nominates the three people representing the public interest. 4

14 The Board is responsible for the management of the Road Fund. The Board is charged with the responsibility of raising funds to ensure that public road infrastructure is fully maintained and rehabilitated. It is also responsible for reviewing the annual road programmes prepared by NRA management and other road agencies, determining the allocation of financial resources to road agencies, recommending to government appropriate road user charges, fines, penalties, levies and any other funds, disbursing and authorizing funds to contractors and preparation of annual accounts. The NRA management team is technically and professionally qualified and have the requisite experience to manage the activities of the authority in a dynamic environment. It combines senior managers with vast experience in road infrastructure development and management recruited from the public and private sector. The organisation has a total staff establishment of 148 and 140 positions are filled. The following figure represents the NRA organisational structure. Organisational Chart of the Roads Authority NRA BOARD Chief Executive Officer Operations Director Finance Director Technical Director (Planning& Design) Technical Director (Procurement Division) Technical Director (Central Roads Division) Technical Director (Urban/District Roads Division) Accountant Treasury Accountant Director of Internal Audit Adminstation /Human Resource Director Planning Section Procurement Section Project administration Section Project administration Section Finance Section Revenue Section Adminstration Section Human Resources Section Zone Units Zone Units Previous Performance At the time of its establishment in 1998, the NRA started from a small budget under a relatively small organizational structure, to manage the maintenance of the road 5

15 network that had deteriorated substantially. However, from its humble start, the NRA has made substantial progress towards the improvement of the road network in Malawi. It has managed to undertake routine, periodic, rehabilitation, upgrading and construction projects in the rural and urban areas. Some of the notable achieved activities and projects are as follows: Road Fund Budget Routine Maintenance Around 9,000 km annually on various classified network over the past period of existence ( ). During the 2005/2006 financial year, the entire designated road network (i.e. 15,451km) received routine maintenance this being the first year of the NRA Five-Year Rolling Plan Periodic, Rehabilitation and Upgrading Seals and overlays Around 40 km annually on various classified network (mainly in urban areas) over the past period of existence ( ) Upgrading Timber deck bridges to concrete decks Around 100 meters annually on various classified road network over the past four years ( ). During the 2005/2006 financial year, about 400 meters were constructed Development Fund Budget Periodic, Rehabilitation, Upgrading and Construction Road Name Coverage in Km Year(s) of execution Zomba Mangochi 125 km 1998 Mzuzu Chiweta 120 km 1998 Kamwendo - Chinkhoma 98 km 1998 Chileka R/bout - Chileka Airport 7 km 1998 Kasungu - Msulira 32 km 1998 Chingeni Liwonde 16 km 1998 Liwonde - Mangochi 70 km 1998 Lilongwe Nsipe 175 km 1999/2000 Limbe Thyolo Muloza 104 km 2000 Lilongwe Mchinji border 120 km 2001 Bunda Chitsime Lumbadzi LIA 88 km 2001 Kanengo Kaphatenga Salima 100 km 2001 Salima Senga Bay 22 km 2001 Kaphatenga Nkhotakota 108 km

16 Periodic, Rehabilitation, Upgrading and Construction Cont. Road Name Coverage in Km Year(s) of execution Nkhotakota - Dwangwa Tukombo 137 km 2001 Lumbadzi Chatoloma 140 km 2001 Chingeni Zalewa 61 km 2001 Mwanza - Blantyre 114 km 2001 Blantyre Chikwawa 44 km 2001 Chiradzulu Limbe 15 km 2001 Zomba Old Airport 4 km 2001 Chileka Roundabout - Blantyre 6 km 2001 Chirimba - Clock Tower 5 km 2001 Naminga - Chiponde - Mangochi 136 km 2001 Liwonde Naminga 24 km 2002 M10 junction Mangochi Bridge 2 km 2002 Karonga - Chirumba - Chiweta 106 km 2002 Msulira - Nkhotakota 80 km 2003 Dwambazi Bridge and approaches 6 km 2003 Nkhata Bay - Kasikizi River 80 km 2004 Chikangawa - Mzuzu 70 km 2004 Blantyre City Selected Roads 8 Km 2005 Lilongwe City Selected Roads 4 km 2005 Kamphata - Nkhoma Road 17 km 2005 Mponela - Ntchisi Road 15 km The NRA Aspirations In line with Government policy on Malawi Economic Growth Strategy that attaches great importance on road infrastructure, it is in the interest of NRA to ensure that all current designated road network is accessible by carrying out continuous routine maintenance. Furthermore it desires to put emphasis on protection of the existing network by carrying out appropriate periodic maintenance and bringing the road network that is in poor condition to maintainable levels by carrying out rehabilitation works. Within these aspirations, selection of roads for upgrading would be based on as much as possible, maximum impact both economically and socially. In this regard, the Plan has been formulated in such a way that meets the following objectives: Provision of all-year round accessibility on all designated Rehabilitation of bitumen roads which have outlived their design life Connecting all district centres with bitumen roads Timely implementation of periodic Construction and upgrading roads to bitumen standard to priority areas through donor support 7

17 Gradually upgrading some unpaved roads to bitumen standard under the Low Volume Sealed Roads Concept Gradual replacement of timber-deck bridges with concrete decks Improved financial and operations management In order to meet these objectives, it would have been ideal if the NRA were to achieve the following specific targets over the planning period: Routine Maintenance To be carried out on the entire designated road network (15,541 km) at an estimated cost of US$7 million annually. It should be noted that the network level is going to change once the Road Reclassification Study currently under way is completed and subsequent gazetting of the new road network. Periodic Maintenance To be carried out on paved road network in fair condition that currently stands at 900 km over the next three years (300 km/year) at an estimated total cost of US$45.0 million. To be carried out on paved network current in good condition that falls due for resurfacing amounting to 1,000 km starting from year four of the plan (500 km/year) at an estimated cost of US$80 million. Rehabilitation To be carried out on Paved road network in poor condition that currently stands at about 230 km over the next four years (58 km/year) at an estimated total cost of US$36 million. Unpaved road network in poor condition that now stands at about 5,500 km over the five years (1,100 km/year) at an estimated total cost of US$10 million. Upgrading of roads to: Low Volume Sealed Roads (LVSR) Standard To be carried out on 750 km of justifiable road network over the planning period (150 km/year) at an estimated cost of US$95 million Conventional Paved Standard To be carried out on 1,250 km of economically justifiable road network over the planning period (250 km/year) at an estimated cost of US$563 million This target area is aimed at increasing the paved network coverage and conversely reducing unpaved network. Upgrading of timber deck bridges with concrete decks: To be carried out on half (6,500 meters) of the existing timber deck bridges over the planning period (1,300 meters/year) at an estimated cost of US$20.0 million. 8

18 The following Table 2.2 is a summary of the desired targets for road infrastructure during the period ( ). Table 2.2: Desired Outputs and associated Financing Needs Activity Routine Desired Outputs in Km (except bridges in m) Financial Needs in million US$ Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 maintenance 15,450 15,450 15,450 15,450 15, Periodic maintenance Paved network Unpaved Rehabilitation network Paved network Unpaved network 1,100 1,100 1,100 1,100 1, Upgrading of raods LVSR Paved Std Upgrading bridges 1,300 1,300 1,300 1,300 1, Total Funding Requirements The Five-Year Plan Since its establishment in 1998, the Roads Authority had been operating on annual budgets with no particular emphasis on medium to long-term requirements for the management of the designated public road network. Although NRA has made a significant impact on the condition of road network since its establishment, it was noted that in order to realise its mission, there was need to have a Five-year Business and Strategic Plan. Such a plan would help NRA to strengthen its capacity in managing the public road network. With this background, the NRA engaged a consultant (SweRoad) in 2002 to formulate a five-year rolling plan. The Plan was to guide NRA to a more focused approach towards road infrastructure development and management. The plan aimed at defining the activities of NRA, focusing on the achievable targets and resource requirements. It took into account forecasted Road Fund revenues that were perceived to be too ambitious and hence was not adopted. The Plan also lacked justification in terms of identification of programmes and their subsequent prioritisation as it took most of its programmes from a draft Road Sector Investment Programme (RoadSIP) document that was not finalised. Most of the suggested programmes in the RoadSIP did not go through project justification processes using 9

19 widely acceptable economic models such as Highway Development and Management (HDM). Following the comments from various stakeholders and cooperating partners on the SweRoads NRA Five-Year Business and Strategic Plan, the NRA has reviewed the plan taking into consideration realistic projections of revenue both from the Road Fund budget and donor support. Although economic modeling tools that could provide inputs to a more objective long-term plan are not yet in place, it is of utmost importance to come up with a rolling medium to long-term plan using any existing reliable information (SMEC report) which will be updated yearly. The importance of the road transport sector calls for continued investment in preservation of the existing designated public road network as well as investment in new road infrastructure. Such an investment has a vital role as far as poverty reduction and stimulating economic growth is concerned. This issue is clearly reflected in the Malawi Government s National Transport Policy and the Malawi Poverty Reduction Strategy. The current state of the road network requires substantial funding and well-planned maintenance interventions if the road-transport system is to facilitate economic growth and development. According to designated public road network level survey that was conducted by NRA through a consultant (EMC Jatula Associates) in 2004, about 29 percent of the road network is in good condition, 34 percent is in fair condition and 37 percent is in poor condition (refer to Table 2.2). This state of affairs cannot support the highlighted Government policies, hence the anticipation that by the end of the five-year period about 71 percent of the road network will be in good condition, 18 percent in fair condition and 11 percent in poor condition. Table 2.3: Road Condition Data a. Road Condition in 2004 Road Km per Road Type % per Road Type Condition Paved Unpaved Total Paved Unpaved Total G ood 2,906 1,518 4,424 72% 13% 29% F air 907 4,408 5,315 22% 39% 34% P oor 225 5,487 5,712 6% 48% 37% T otal 4,038 11,413 15, % 100% 100% b. Anticipated condition in 2011 Road Km per Road Type % per Road Type Condition Paved Unpaved Total Paved Unpaved Total G ood 3,400 7,500 10,900 84% 66% 71% F air 500 2,300 2,800 12% 20% 18% P oor 138 1,613 1,751 3% 14% 11% T otal 4,038 11,413 15, % 100% 100% 10

20 3. The Business and Strategic Plan 3.1 Overall Programme The Business and Strategic Plan stipulates the development and management of roads and bridges involving routine maintenance, periodic maintenance, rehabilitation, and upgrading at a total cost of US$ million during the planning period ( ) with proper planning tools in place. The road programme is in two categories: Road Fund programme comprising routine maintenance, periodic maintenance, rehabilitation, upgrading of roads to low-volume paved standard and replacement of timber-deck bridges with concrete decks, and Development programme comprising periodic maintenance, rehabilitation, and upgrading of roads and bridges. The plan prioritises routine maintenance on the entire designated public road infrastructure network at all times. All routine and any emergency maintenance works will be funded from the Road Fund budget. Any balances from the Road Fund, after satisfying the routine maintenance and emergency needs, will be used to undertake some periodic maintenance and rehabilitation on the designated network, upgrading of roads to low-volume paved standard, and replacement of timber-deck bridges with concrete decks. The development budget will be used to finance periodic maintenance on both paved and unpaved designated road network, rehabilitation on the designated road network, upgrading of roads to paved standard, upgrading of earth roads to gravel standard and upgrading of bridges. Annex B (Tables 1 8) summarises the combined programme (Road Fund and Development) in terms of financial requirements and associated planned physical outputs under the different programmes over the planning period. This annex also gives a summary of programmes implementation and the funding status. It will be noted from this annex (Table 3) that the plan has a funding gap of US$ million. 3.2 Specific Programmes Road Fund Programmes The Road Fund programme comprises routine maintenance, periodic maintenance and rehabilitation on the designated network, upgrading of roads to low-volume paved standard, and replacement of timber-decked bridges with concrete. Annex C (Tables 1 and 2) is a summary of the Road Fund budget to the various planned programmes and their associated planned physical outputs over the planning period. It will be noted 11

21 from these two tables that US$77.19 million will be required to achieve physical planned outputs of 15,451 kilometers of annual routine maintenance, 135 kilometers of periodic maintenance, 124 kilometers of rehabilitation, 116 kilometers of upgrading of road to low-volume paved standard and 2,961 meters of replacement of timber-deck bridges with concrete decks plus various planning activities. The individual intervention programmes are described as follows: Planning and Design Programmes Realising the crucial role proper planning plays in the implementation of any programme in any organisation, the NRA has lined up a number of activities that will back-up, enhance and ease the execution of programmes articulated in this plan. Accordingly, US$6.33 million (representing about 1% of the overall road programmes budget) has been allocated to various activities over the planning period refer to Annex D Table 1. Routine maintenance The main focus under the Road Fund budget is to carry out all time routine maintenance activities on the entire designated road infrastructure network of 15,451 kilometers - refer to Annex A. Such all year round routine maintenance fits well with NRA s objective of ensuring that public roads are maintained and rehabilitated at all times. It will also enable NRA realise its mission of developing and maintaining the public road network infrastructure investment in a cost effective manner with a view to providing an accessible, reliable, efficient, safe, sustainable and most economic transport system in Malawi. NRA is aware of the fact that a larger proportion of the road network falls under fair to poor condition. A rehabilitation programme has been formulated under the development budget to bring the entire designated unpaved road network from fair/poor condition to good condition so as to enable this alltime routine maintenance have the desired impact of sustaining the network in good condition. The rehabilitation of unpaved roads under the development budget will run concurrently with this routine maintenance over the implementation period ( ). This approach has been planned because experience has shown that routine maintenance even on a very poor road makes a whole lot of a difference in making the road accessible to traffic. NRA therefore plans to spend US$34.99 million on routine maintenance over the planned period ( ). It is envisaged that funding requirements for such maintenance will be US7.55 million in the first year and will gradually 12

22 reduce by 5 percent annually to a constant level of US$6.76 million by 2008/ refer to Annex D Table 2. Periodic, Rehabilitation and Upgrading Works Having satisfied the routine maintenance requirements on the entire designated road network, any balances of funds will be used for the intervention measures outlined below. Periodic Maintenance of Roads This programme will target paved roads and road sections that are due for periodic maintenance. Such an intervention will prevent candidate roads falling into rehabilitation category that is a more expensive activity to undertake. Under this programme, the intention is to cover 137 kilometers over the planning period ( ) - refer to Annex D Table 3. Rehabilitation of Roads This intervention will be targeting mainly paved roads and road sections that have substantially deteriorated such that it is uneconomical to carry out periodic maintenance and to the extent that routine maintenance is virtually impossible. Such roads and road sections are characterized by extensive deformations and potholes. This will mainly be done in urban areas where a substantial proportion of the network is in poor condition. Under this programme, the intention is to cover 124 kilometers at a total cost of US$10.42 million over the planning period ( ) - refer to Annex D Table 4. Upgrading Earth Roads to Low-Volume Sealed Roads This intervention will be targeting roads and road sections that were found to be economically viable under the SMEC Study. It is assumed that the trends in the prioritisation remain unchanged. The intervention will also address the serious shortage of gravel material in the country, which is not a renewable resource. Experience has shown that upgrading the roads to low-volume sealed roads brings a lot of benefits in various ways such as reduced routine maintenance cost, travel time and vehicle operating costs. Under this programme, the intention is to cover 116 kilometers at a total cost of US$11.60 million over the planning period ( ) - refer to Annex D Table 5. 13

23 Timber-deck Bridges replacement with Concrete decks Maintenance of timber-deck bridges has proved to be a very expensive activity. It does not only erode resources but it also contributes heavily to the wanton deforestation. It is against this background that the NRA has in the past three years taken a deliberate policy of replacing timber-deck bridges with concrete decks with the intention of reducing the number of timber deck bridges to zero. Under this programme, the intention is to cover 2,961 meters at a total cost of US$8.37 million over the planning period ( ) - refer to Annex D Table Development Programmes The development programme comprises periodic maintenance, rehabilitation, upgrading of roads to gravel and paved standard and construction of concrete bridges. The programme is essentially targeting roads sections that were found to be economically viable under the SMEC Study and it also includes roads that have already secured funding. Annex E (Tables 1 and 2) is a summary of the development budget with various planned programmes and associated planned physical outputs over the planning period. From these two tables, it will be noted that US$ million will be required to achieve physical planned outputs of 1,718 kilometers of periodic maintenance, 429 kilometers of rehabilitation, 1,095 kilometers of upgrading of roads to paved standard, 185 kilometers upgrading of earth roads to gravel standard and 2,410 meters construction of concrete bridges. The individual intervention programmes are described as follows: Periodic Maintenance of Paved Roads This intervention is similar to the intervention under the Road Fund budget. The entire periodic maintenance intervention programme is intended is to cover 1,718 kilometers at a total cost of US$71.91 million over the planning period ( ) - refer to Annex F Table 1. Rehabilitation of Paved Roads This intervention is similar to the intervention under the Road Fund budget. The intention is to cover 429 kilometers at a total cost of US$82.77 million over the planning period ( ) - refer to Annex F Table 2. Upgrading of Earth Roads to Paved Standard This intervention will be targeting roads and road sections that were found to be economically viable under the SMEC Study including those that are at an advanced stage of securing funding. The intention is to cover 1,185 kilometers 14

24 at a total cost of US$ million over the planning period ( ) - refer to Annex F Table 3. Upgrading of Roads to Gravel Standard It is not in the interest of NRA to undertake gravelling works due to reasons already highlighted, however this one-off programme has been included in the plan since it has already secured funding. Under this programme, the intention is to cover 185 kilometers at a total cost of US$7.03 million over the planning period ( ) - refer to Annex F Table 4. Construction of Concrete Bridges This programme has two components. The first component is for construction of new bridges and replacement of existing bridges that are insufficient in terms of capacity or are single lane. The second component complements the timber-deck bridge replacement with concrete decks under the Road Fund budget. This is aimed at gradually reducing the number of timber-deck bridges to zero so as to gradually cut down on the heavy maintenance costs. The intention is to cover 2,410 meters (910 meters under the first component and 1,500 meters under the second component) at a total cost of US$40.30 million over the planning period ( ) - refer to Annex F Table 5. 15

25 4. Financial Plan 4.1 General NRA has two budget components, Road Fund and Development Fund. The Road Fund comprises of locally generated revenue from dedicated sources, which at the moment are, Fuel Levy, Road User Charges and some donor budgetary support. The Development Fund constitutes parliamentary appropriations and assistance for development partners. 4.2 Road Fund The Road Fund is mainly used for Routine maintenance and, on a small scale, for higher level maintenance. The revenue base of the Road Fund currently comprises fuel levy, international transit fees and overload fees. Fuel levy constitutes the main source of revenue accounting for over 80% of total income. Although efforts are being made to broaden the income base, only increase in fuel levy can have a significant impact on the income for the Road Fund Key Assumptions The following are key assumptions used in the estimation of the Road Fund income over the five-year planning period. The quantity of fuel imported in the country is currently at 90 million litres of petrol and 135 million litres of diesel. It is estimated that the quantities will increase by 2.5% annually due to the expansion of the economy The current levy is MK8.70 per litre for petrol and MK6.70 per litre for diesel, which translates to about US$ and US$ respectively. It is assumed that the rate will remain the same in the first year but the average levy will increase by 2.5% annually to maintain the purchasing power of the income The current income from International Transit Fees is MK200 million. It is expected that this will increase by 10% annually owing to the expansion of the economy and improved collection mechanisms Capital expenditure will be maintained at US$45,000 annually to enable the Authority maintain optimum number of assets. Annual provisions for depreciation of the same amount will be made to set aside funds to enable the Authority to replace them after their useful economic life 16

26 4.2.2 Estimated Road Fund Income and Expenditure Table 4.1 is a summary of income and expenditure estimates over the five-year period. Table 4.1: Summary Income and Expenditure Estimates (US$ 'million) Year 1 Year 2 Year 3 Year 4 Year 5 Total 2006/ / / / /11 Projected Revenue Fuel Levy Other Road User Charges Total Income Projected Expenditure Road Maintenance Central Planning Activities Operating Expenses Capital Expenditure Total Expenditure Development Fund Development funds mainly finances backlog maintenance, rehabilitation and construction of roads and bridges. The plan for the period has taken into consideration priorities of the Government in the road sector and the current goodwill with development partners will ensure that the plans would be achievable Estimated Development Fund Budget The Development Budget for the period is planned to be US$ million distributed as follows: Year 1: $88.54 million Year 2: $ million Year 3: $ million Year 4: $ million Year 5: $ million Funding for the first two years has been based on funding agreements already in place while the rest of the years have been based on projections from the trend in the first two years. 17

27 5. Implementation Strategies In order to realise the programme outputs stipulated in this plan, NRA will adopt the following strategies: 5.1 Use of Modified Performance-Based Term Contracts for Routine Maintenance Under this strategy, NRA will be awarding all-time routine maintenance contracts on long-term basis (minimum 1 year) over the planning period and will cover the entire designated public road network. These contracts have two major distinct components outlined below. The first component will be on labour-based routine maintenance activities using the length-man concept. Under this component, it is intended that the contractors should use the abundant labour resource in carrying out routine maintenance activities such as: Side and mitre drains opening and de-silting Culvert de-silting Gullies, depressions and low shoulders filling Carriageway reshaping on unpaved roads Vegetation cutting and clearing High shoulder trimming on surfaced roads Foreign material and debris removal from road carriageway Planting of grass on unstable shoulders, embankments, etc Anti-hill removal The contractors shall provide a labourer for each defined road section with simple and basic hand tools for the execution of the aforementioned activities. These will be tools like wheelbarrow, shovel, pick, hoe, rake, slasher and panga knife. Minimum performance standards will be agreed with the contractor. Fixed monthly payments will be made to the contractor over the contract period, less penalties for any lack of compliance. The second component is where contractors will provide rates only for contracts with materials and equipment-based activities such as: Masonry and concrete works Timber bridges re-decking Pothole patching Spot gravelling Road furniture replacement and maintenance 18